RECOMMENDATION: Approve and authorize a Lease Agreement between State Venture, LLC (Landlord) and the City of Houston, Texas (Tenant) for office space and parking at 2525 North Loop West, Houston, Texas, for the Psychological Services Division of the Houston Police Department (HPD).
SPECIFIC EXPLANATION: The General Services Department recommends approval of a Lease Agreement with State Venture, LLC (Landlord) for approximately 5,500 net rentable square feet of office space on the fourth floor and 20 parking spaces in the adjacent garage at 2525 North Loop West for HPD Psychological Services.
The space is occupied by eight doctors and two administrative staff. The Psychological Services Division is responsible for psychological services within HPD. Due to the sensitivity of these services, HPD determined that this function should be isolated from City and other HPD functions and services. City owned space is not available for the Division. Several third-party lease options received serious consideration. Psychological Services selected 2525 North Loop West because of its location, access to onsite visitor parking at no charge, and the setting upon which the building is situated.
Currently, Psychological Services operates out of approximately 5,293 square feet at 12941 North Freeway and is charged $20.25 per rentable square foot.
The proposed Lease Agreement provides for a ten-year initial term with ten months free rent beginning at a $22 per square foot base rent plus the City’s pro-rata share of operating expenses over 2023 base year expenses. The City has an option to renew for one additional five-year term at the then-prevailing market rental rate. The Landlord, at its sole cost and expense, will provide a tenant improvement allowance based on stipulated 5,500 SF of net rentable area to meet Psychological Services specifications. City, at its sole cost and expense, will provide IT equipment.
The Lease commences on the later of substantial completion of Landlord’s work, November 1, 2022, or Tenant’s receipt of a certificate of occupancy from Landlord.
PROJECT LOCATION: 2525 North Loop West Houston TX
The estimated rental costs are as follows:
|
Months 10 years plus 10 months free rent
|
Total Annual Payments
|
Total Monthly Payments
|
|
1-6
|
$0.00
|
$0.00
|
|
7-18
|
$121,000.00
|
$10,083.33
|
|
19
|
$0.00
|
$0.00
|
|
20-31
|
$126,500.00
|
$10,541.67
|
|
32
|
$0.00
|
$0.00
|
|
33-44
|
$129,387.50
|
$10,782.29
|
|
45
|
$0.00
|
$0.00
|
|
46-57
|
$132,281.88
|
$11,023.49
|
|
58
|
$0.00
|
$0.00
|
|
59-70
|
$135,183.47
|
$11,265.29
|
|
71-82
|
$138,092.64
|
$11,507.72
|
|
83-94
|
$141,009.77
|
$11,750.81
|
|
95-106
|
$143,935.26
|
$11,994.61
|
|
107-118
|
$146,869.53
|
$12,239.13
|
|
119-130
|
$149,813.00
|
$12,484.42
|
|
|
$1,364,073.05
|
|
FUNDING SUMMARY:
$ 00.00 Rent for 6 months FY23 (6 months free)
$1,364,073.05 Rent for out-going years
$ 630.00 Parking for 6 months FY23
$ 21,960.00 Parking for out-going years
$ 7,387.00 One-time IT
$ 9,084.00 One-time physical move of contents
$ 20,000.00 Contingency (OE variance over ten-year term and other unforeseen)
$1,423,134.05
FISCAL NOTE: Funding for this item is included in the FY2023 Adopted Budget. Therefore, no Fiscal Note is required as stated in the Financial Policies.
|
Estimated Spending Authority
|
|
Department
|
FY2023
|
Out-Years
|
Total
|
|
Houston Police Department
|
$22,101.00
|
$1,401,033.05
|
$1,423,134.05
|
DIRECTOR’S SIGNATURE/DATE:
____________________________
C. J. Messiah, Jr.
General Services Department
___________________________
Troy Finner
Houston Police Department